Revenue forecasting uses three complementary methods: (1) Top-down — % of market you'll capture, (2) Bottom-up — sales capacity × close rate × deal size, (3) Analogous — compare to similar companies at your stage. Using all three and reconciling increases credibility.
Key Takeaways
- Use 3 methods (top-down, bottom-up, analogous) and reconcile.
- Bottom-up = most credible (sales capacity × deals × price).
- Year 1 discount: new reps produce at ~50% capacity.
- Separate recurring vs one-time revenue for investor clarity.